Small firms warn on drop in GDP

Market Briefing represents the views of the industry on issues affecting the leasing broker market. If you have a view you would like to express, please email the editor: ralph.morton@brokernews.co.uk. Market Briefing is supported by FleetProcure, the online vehicle purchasing system used by leasing brokers and dealers.

WITH Q2 GDP falling 0.1% according to new Office for National Statistics (ONS) figures, the national chair of the Federation of Small Businesses (FSB), Martin McTague, offered this commentary:

“The estimated fall in the headline GDP measure is unwelcome but unsurprising news for small firms, whose confidence nosedived over the quarter, according to our research.

“The 0.2% real-terms fall in household consumption despite rises in outlay on housing and travel is a flashing alarm for small businesses, many of whom rely on consumer spending.

“With levels of fuel poverty skyrocketing, fuel and energy costs far higher than they were in the same quarter last year, and rent costs rising steadily, there is less left in people’s pockets for holidays, new clothes, meals out, and other discretionary spending, leading to lower sales for many small businesses.

There is no excuse for the Government to sit on its hands, with the very survival of thousands of small businesses at stake, and a recession looming.

Martin McTague Tweet

“Small firms were also hammered over the quarter by rising taxes. The National Insurance hikes in April have piled more financial stress onto the cost of running a business, at a time when inflation has spiked to a four decade high.

“We have been urgently drawing attention to the cost of doing business crisis for months now, as our members tell us that they are struggling to keep up with ever-rising costs – producer input prices rose by 24% in the year to June 2022, the highest level registered since records began in 1985.

“Adding in the recent jump in the base rate, which means a higher cost of borrowing for many kinds of commercial and personal debt, and which will dampen consumer spending, there’s little sign of any relief coming any time soon.

“Today’s figures must be a wake-up call to policymakers that urgent intervention is needed.

“A menu for recovery should include help for small businesses on energy bills, a reversal of the National Insurance hikes, a VAT cut, a reduction in fuel duty, and rooting out the late payment crisis that leads to the demise of thousands of otherwise viable small businesses every year.”